******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) File Nos. Metricom, Inc.'s ) 01989WSL97 02106WSL97 Request for Waiver of Section 27.208(a) ) 02107WSL97 02108WSL97 of the Commission's Rules ) 02109WSL97 02110WSL97 for Wireless Communications Service ) 02111WSL97 02112WSL97 Markets: ME30A, ME45A, ME46A, RE01D, ) RE05C, RE05D, RE06C, RE06D ) ORDER Adopted: January 16, 1998 Released: January 16, 1998 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION AND BACKGROU ND 1. By this Order, we partially grant a request for waiver of section 27.208(a) of the Commission's rules filed by Metricom, Inc. (Metricom), a winning bidder for eight markets in the Wireless Communications Service (WCS) auction. On July 21, 1997, the Wireless Telecommunications Bureau released a Public Notice conditionally granting various applications for WCS licenses, including those filed by Metricom. In that Public Notice, applicants were notified that the grant of each WCS license was conditioned on the full and timely payment of the remainder of the applicant's winning bid within ten business days. Accordingly, final payments were due on August 4, 1997. 2. The total final payment amount owed by Metricom as of August 4, 1997, was $1,157,627.20. Metricom instructed Wells Fargo Bank (Wells Fargo) to wire that amount to Mellon Bank (Mellon), which receives funds on behalf of the U.S. government, on August 4, 1997, but the payment was returned by Mellon later that day. Metricom states that upon discovery of the returned funds, it immediately alerted the Commission's Billings and Collections Branch of the problem and initiated an investigation to determine its cause. On August 6, 1997, Metricom resubmitted its wire transfer of $1,157,627.20 to Mellon and filed a request for waiver of the payment deadline with the Commission. II. DISCUSSION 3. Section 27.208(a) of the Commission's rules states that "auction winners are required to pay the balance of their winning bids in a lump sum within ten (10) business days following the award of the license. Grant of the license will be conditioned on full and timely payment of the winning bid." Absent a waiver of the deadline, applicants that fail to remit the balance of their winning bid in a timely manner are deemed to have defaulted and are subject to a default payment equal to the difference between their bid and the amount of the winning bid the next time the license is offered for auction plus three percent of their bid or the subsequent winning bid, whichever is less. WCS applicants were instructed by Public Notice to "submit to Mellon Bank the balance of their winning bids in a lump sum payment by August 4, 1997." Applicants were also notified that payments had to be made in the form of a wire transfer. 4. Metricom contends that it attempted to make a timely payment to the Commission but that its bank, Wells Fargo, failed to follow its specific wiring instructions and did not name a beneficiary or provide the Commission's account number or payment type code on the wire transfer to Mellon. Metricom explains that when it became aware that its wire transfer had been returned, it quickly acted to rectify the situation and tendered the full balance of $1,157,627.20 by wire transfer on August 6, 1997. Metricom has provided the Commission with a date-stamped copy of the detailed wire transfer instructions that it provided to Wells Fargo on August 4, 1997. 5. To receive a waiver of the Commission's payment rule, an applicant must demonstrate either "that the underlying purpose of the rule will not be served, or would be frustrated, by its application in a particular case, and that grant of the waiver is otherwise in the public interest"; or "that the unique facts and circumstances of a particular case render application of the rule inequitable, unduly burdensome or otherwise contrary to the public interest." As the Commission has previously noted, the integrity and functioning of the auction process is dependent on the prompt payment of an applicant's obligations. Timeliness of payments is a necessary indication that a winning bidder is financially able to meet its obligations and intends to use the license for the provision of services to the public. Prompt payment requirements also deter defaults by discouraging insincere or financially unqualified bidders from "shopping" a winning bid in order to obtain financing. 6. We believe that Metricom has presented sufficient facts to meet the standard for a partial waiver of the Commission's payment rule. There is no indication in the record that the returned wire transfer was part of a deliberate effort by Metricom to delay payment. To the contrary, we note that upon receiving notice that its wire transfer had been returned by Mellon, Metricom immediately took action to investigate and to ensure that its payment was submitted. Thus, Metricom's final payment was submitted to Mellon two days after the deadline. Metricom's actions demonstrate that, but for an administrative error, it would have been able to meet its payment obligations in a timely manner. 7. Under the circumstances presented by Metricom, we conclude that the public interest would not be served by rigid enforcement of the final payment deadline, which would result in the cancellation of Metricom's conditional licenses. Such cancellation could result in not only the imposition of a very substantial default payment on Metricom but also a delay in service to the public while the Commission reauctions the licenses. Such a delay is not warranted in this instance because there is no question regarding Metricom's ability to meet its financial obligations. 8. Nevertheless, we do not believe that Metricom is entitled to a complete waiver of the payment deadline. The Commission has routinely stated that the ability to make timely payments is the responsibility of auction winners. Metricom therefore bears ultimate responsibility for ensuring that the Commission's financial deadlines are met. We note also that the Commission's default rules exist in part to provide licensees with the incentive to maintain adequate systems for transferring payments to the Commission. Thus, we conclude that Metricom should be subject to a late payment fee of five percent of the $1,157,627.20 that was not timely paid. This amount is commercially reasonable and serves to underscore the importance of the timely receipt of all auction payments. It is also consistent with the Bureau's policy of assessing a five percent late fee in cases where it has waived a payment deadline, and with the Commission's recent decision to permit auction winners to submit their final payments up to ten business days late so long as they submit a late fee of five percent. 9. For the reasons stated above, pursuant to section 4(i) of the Communications Act, as amended, 47 U.S.C.  154(i), and section 27.310 of the Commission's rules, 47 C.F.R.  27.310, the request for waiver filed by Metricom, Inc., on August 6, 1997, IS HEREBY GRANTED IN PART, subject to a five percent late fee, as specified above. Such late fee of $57,881.36 must be paid within ten business days after the release of this order. This action is taken under delegated authority pursuant to section 0.331 of the Commission's rules, 47 C.F.R.  0.331. FEDERAL COMMUNICATIONS COMMISSION Daniel B. Phythyon Chief, Wireless Telecommunications Bureau